iPhone app upscaling was a major feature in Steve Job's iPad keynote, and why not? It guaranteed the tablet 150,000 apps at launch. Here's the problem: It looks terrible. And it's not just the pixels.
There's no better way to illustrate this that with screencaps, so I've included a few sets, which you should click to enlarge. At the top, we've got Tweetdeck, in its native iPhone resolution, upscaled resolution, and as a revamped iPad app. In the gallery below, we've got Need for Speed: Shift and Plants vs. Zombies, in their respective iPhone, upscaled, and revamped iPad resolutions.
It's not apparently until you blow the photos up, but the upscaling looks terrible. Text is chunky and rough, games look pixelated, and you're forced to use the iPhone keyboard, which looks and feels absurd. (See again.) But the most jarring aspect of it all, as shown by the Tweetdeck apps, is that iPhone apps simply aren't designed for the larger screen. They look cartoonish. Text is massive. Buttons take up too much space. In the case of text-based apps, the iPhone-centric design is enough to render them useless. If an app hasn't been designed for the iPad specifically, you probably won't enjoy using it.
The weirdest thing about this is that Apple knew. It's as if they planned to include this functionality just in case developers didn't rise to the task of rewriting their apps for the iPad, which, with over 2000 converted apps in the App Store as of now, clearly isn't the case. What we're left with is a feature that I—and I suspect most people—will use once or twice, and never revisit again.